by W. H. Lindgren

Created on: May 09, 2011   Last Updated: April 28, 2012

News editor Patrick Allen was assigned on April 21 as "Head of News" in London for the Eastern Mediterranean and East Africa (EMEA) operations at CNBC. On April 28 CNBC.com published his very short article "The Fed Will Make Sure Obama Wins in 2012: Strategist" which also showed a companion commentary subtitled "Strong Dollar Policy?" The two concepts seem oddly paired since they are somewhat contradictory. If the Federal Reserve Bank (Fed) continues with the policy of "quantitative easing," (now termed QE2) by setting up a new QE3, it is most likely that the creation of new money would soften or devalue the dollar and preclude a stronger dollar in the World markets.

Even more oddly, Allen attributes the description of possible or potential Fed policy actions to a so-called "strategist" named Thanos Papasavvas. FXWeek.com, a website focused on foreign exchange topics, notes that "Born in Athens, Papasavvas studied in London and spent two years as an economist with the UK government. He joined Credit Suisse First Boston's fixed-income team in 1994 and later became head of currency management at Credit Suisse Asset Management before joining Investec Asset Management in 2006. As head of currency management, he has been tasked to expand the firm's currency portfolio to focus more on institutional clients." It is not possible to find any credentials of his as a political strategist at all, much less concerning the 2012 United States presidential campaign or politics in general.

By guessing that the Fed will continue or renew quantitative easing, Papasavvas arrives at his general idea that this would help Pres. Obama's re-election campaign. The professional currency manager may have some insight into the possible actions of the Fed, but his political comments are almost as "hedged" as a derivatives fund by special conditions such as no "double dip recession" or no "increase in unemployment" and the continued divisive scattering of the Republican candidates who cannot seem to present a major rival for Pres. Obama.

For what appear to be no sensible reasons or justifications, scores of conservative websites have featured the CNBC headline and article by Mr. Allen. Online publishers such as freerepublic.com, dailypaul.com, reteaparty.com, ronpaulforums.com, and many Google search pages full of others, repeat the commentary.

It seems not to make sense. In all probability, none of these websites would want Pres. Obama to win the 2012 election. It's very odd that so many of them would even reference an article that predicts a 2012 victory by Mr. Obama. Perhaps the publishers of these websites are motivated by the stated claim that the Fed would actually use its monetary management powers to create some form of indirect influence on the election by generating "soft" money or "loose" currency to artificially puff up the US economy, which would then, somehow, be helpful to the Obama administration.

The notion that the Fed may generate a QE3 is a wild guess in the first place. That such a questionably potential QE3 would result in an end, or faster improvement, to the recession and then to also reduce unemployment is even more wild. Such a sequence of improbable events could perhaps help the incumbent, but there are not very many logical probabilities that would make this a predictable result.

Clearly, a European currency manager for a large fund (certainly not a "strategist" in the usual meaning of the term) did in fact say that "the Federal Reserve will make sure Obama wins in 2012." However, that seems to be a very unlikely speculation based on some rather questionable assumptions.

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